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CBAI Urges Regulators to Provide Additional Relief to Community Banks in Proposed Incentive-Based Compensation Rule

In a comment letter dated July 22, 2016, CBAI addressed the Agencies' proposed implementation of the Dodd-Frank Act rule regarding incentive-based compensation arrangements. The Act requires regulators to prohibit any types of incentive-based compensation arrangements that encourage inappropriate risks by covered financial institutions (i.e., depository institutions or holding companies that have $1 billion in assets or more).

While CBAI appreciates the Agencies’ efforts to tier regulation in this proposal, they did not go far enough to properly exempt community banks from the regulatory burden imposed by this proposed rule and should concentrate greater efforts in addressing the significant risks posed by the largest banks to the financial system and economy while providing maximum regulatory relief for all community banks.

CBAI specifically urged the Agencies to reinforce the existing $1 billion threshold exemption so that regulations intended for the largest banks do not ‘trickle down’ to community banks; modify the categories to exempt banks with less than $50 billion in assets from the rule; and eliminate the Agencies’ ‘reservation of authority’ which allows the regulators of institutions greater than $10 billion but less than $50 billion to require compliance with some or all of the requirements of the proposed rule at the option of the regulators. Read CBAI Comment Letter.

July 22, 2016